My latest thoughts on the Bitcoin network. This time I was inspired to look at what's actually been happening with transaction fees in light of the various arguments about the impact of block capacity scarcity.

That's a great presentation, thank you for that. It's nice to see that it hasn't reached the point to where transactions really have to compete with fees to be confirmed yet so we are not now in some crisis to increase blocksize.

Also it is very good to see how the transactions per day are steadily increasing which to me means that Bitcoin is doing very well. I think it is currently very undervalued due to all the drama and squabbling over blocksize and hardforking.

"The last 2 months have seen particular jumps, but that may in part be explained by the dramatic increases in hash rates again. "

How is hashrate related to that? It's the speed of block transactions that matter, no?

When the hash rate is increasing between difficulty retargets we see blocks being solved more quickly. Instead of, say, 10 minutes on average we see blocks taking 9 minutes, so this means there's more capacity available to handle transactions. This reduces the pressure on transactions and therefore means that it's much more likely that low or zero fee transactions will get included in blocks by block makers (because they don't have anything better to do with the block space).

Current fees are effectively pittance, I'm always happy to pay 3 or 4 times the average fee to ensure my transactions are confirmed in the next block.

They may be pittance if you are sending considerable amounts of money but if you need to do microtransactions daily for whatever reason it will add up very quickly.

Yep, for the likes of people who do microtransactions every day and do not want to delay it, those fees were already substantial. Adding it (the fees) up is already significant to others (like me, lol).

what is the number of the "miners reward per transaction graph" on the y axis?

Oops- forgot to add a label this. I just updated the graphic. The value is in USD.

is this correct, because it would mean that they are earning $2M for the total sum of the transaction per day on average? 225k tx per day x $10

it's more than their reward from mining...

The 28-day moving average is the red dashed line and is running at about $8 at the end of the chart, while the 28-day moving average for the number of transactions (just updated the graphic in the article to show that) is running at 200k, so that's $8x200k = $1,600,000. Here's the graph of mining rewards per day (I didn't end up using it when I wrote the article): http://hashingit.com/images/articles/20160203/rewards-per-day-usd.png

What interest me - 2MB block will be reality soon, right? So how much will fees increase by then? Will they be effectively doubled?Will this upgrade kill faucet and some services possible now, because of low transaction fees?

What interest me - 2MB block will be reality soon, right? So how much will fees increase by then? Will they be effectively doubled?Will this upgrade kill faucet and some services possible now, because of low transaction fees?

This analysis is very interesting and a strong argument against those who detrate bitcoin protocol. It shows the network can sustain a high demand for usage and even so it can acquire productivity as the technology evolves.

So many spam attacks lately, but it's kinda funny how the average on-chain usage seems to be going down. Would it be safe to assume that bitcoin is receiving less usage today than it did a couple of years ago or is it that nowadays more transactions happen off-chain.

what is the number of the "miners reward per transaction graph" on the y axis?

Oops- forgot to add a label this. I just updated the graphic. The value is in USD.

is this correct, because it would mean that they are earning $2M for the total sum of the transaction per day on average? 225k tx per day x $10

it's more than their reward from mining...

The 28-day moving average is the red dashed line and is running at about $8 at the end of the chart, while the 28-day moving average for the number of transactions (just updated the graphic in the article to show that) is running at 200k, so that's $8x200k = $1,600,000. Here's the graph of mining rewards per day (I didn't end up using it when I wrote the article): http://hashingit.com/images/articles/20160203/rewards-per-day-usd.png

well my point stand, at present they essentially earn the same amount of their mining reward, in fee, this is crazy...because basically they doon't need to mine

then something comes in to my head, why on blockchain.info it say "Total Transaction Fees" 39 btc is that value per block? i don't think it is per day, too small...